Where does the Oil Spill Liability Trust Fund receive its balance? Who pays into it?

The Oil Spill Liability Trust Fund (OSLTF) established by the Oil Pollution Act (OPA) is funded in several ways:

• Investment interest on the Fund’s principal
• Costs recovered from responsible parties
• Civil and criminal penalties from responsible parties
• Barrel tax on domestic and imported oil
• Transfers from other legacy pollution funds

Historically, the largest source of income for the Fund has been the per-barrel excise tax on imported and domestic oil. The Energy Policy Act of 2005 re-instated the tax in April 2006. The Energy Improvement and Extension Act of 2008 extended the tax through December 2017 and increased the rate from 5 cents to 8 cents (2009–2016) and to 9 cents in 2017.

The Act also repealed the requirement that the tax be suspended when the Fund balance exceeded a specified amount.

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Who pays the OSLTF oil tax?

The per-barrel tax to finance the OSLTF is addressed at section 4611 of the Internal Revenue Code (26 U.S.C. 4611). The tax applies to crude oil received at a U.S. refinery and to petroleum products entered into the U.S. for consumption, use, or warehousing. It also applies to other domestic crude oil used in, or exported from, the U.S.

The tax on crude oil received at a U.S. refinery is paid by the refinery operator. The tax on imported petroleum products is paid by the person entering the product for consumption, use, or warehousing. The tax on other crude oil is paid by the person using or exporting the crude oil.

While the Coast Guard manages certain uses of the OSLTF, collection of taxes and deposit of collections to the Fund is managed by the Department of the Treasury.

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What does the trust fund pay for?

The OSLTF has two components.

• The Emergency Fund is used to fund removal activities and the initiation of natural resource damage assessments.
• The Principal Fund, the portion exclusive of the Emergency Fund, is used primarily to:
  • Adjudicate and pay claims for certain uncompensated removal costs and damages

Congressional appropriations to various federal agencies (including the Coast Guard) support implementation, administration, and enforcement of OPA, as well as oil spill research and development.

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How much money does the trust fund have in it? What is the forecast for the Fund?

The status and forecast of the OSLTF is available in the Liability Limits Report .

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How long has the trust fund been around?

Congress created the Fund in 1986, but did not authorize use of the money or revenue collection until August 1990, when OPA was signed into law and use of the OSLTF was authorized.

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Is there a limit to how much the OSLTF will pay into a response?

Expenditures from the Fund for any one oil pollution incident are limited to $1 billion or the balance of the Fund, whichever is less. Natural resource damage assessments and claims in connection with any one incident are limited to $500 million of the $1 billion per-incident limit.

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How much do you recover from responsible parties to pay back the Fund?

Under OPA, responsible parties are liable for costs and damages. The NPFC operates a billing and collection program to recover costs expended by the Fund in accordance with U.S. debt collection laws. In recent years, the NPFC has collected approximately $7–$14 million per year of removal and damage costs paid from the Fund. Barriers to higher recovery include:

• In nearly half of spills, the FOSC cannot identify the source or an RP
• Costs exceeding an RP’s liability limit are generally unrecoverable
• Responses for onshore facilities are often complex and costly, and many such facilities are abandoned or uninsured

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How are OPA and the OSLTF different from CERCLA and Superfund?

Although not comprehensive, the table below summarizes some of the differences.

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